The Labor Agreements Between UAW And The Big Three Automakers-Good Economics Or Bad Economics?

Abstract

On October 10, 2007, the UAW membership ratified a landmark, 456-page labor agreement with General Motors.  Following pattern bargaining, the UAW also reached agreement with Chrysler LLC and then Ford Motor Company.  This paper will examine the major provisions of these groundbreaking labor agreements, including the creation of the Voluntary Employee Beneficiary Association (VEBA), the establishment of a two tier wage structure for newly hired workers, the job security provisions, the new wage package for hourly workers, and the shift to defined contribution plans for new hires.  The paper will also provide an economic analysis of these labor agreements to consider both if the “Big Three” automakers can remain competitive in the global market and what will be their impact on the UAW and its membership.